Posts from ‘June, 2007’

Headline: The Power of Perception

Consumers are flooded by corporate marketing campaigns linking to social issues. 

Indeed, the public now expects just about every company to be allied with a cause, according to Carol Cone, whose brand-strategy firm recently conducted a survey on cause-related marketing.  The best corporate reputation belongs to Microsoft Corporation, according to one of the oldest and most respected indexes from Delahaye.  It’s top spot is cemented by its well-publicized philanthropy.

A more sophisticated understanding of the power of perception is starting to take hold among savvy corporations.  More are finding that the way in which the outside world expects a company to behave and perform can be its most important asset.   A company’s reputation for being able to deliver growth, attract top talent, and avoid ethical mishaps can account for much of the 30%-to-70% gap between the book value of most companies and their market capitalizations.

A company’s message must be grounded in reality and its reputation is built over years.  In the late 1990s, investors began to recognize reputation was in part responsible for the sky-high market values of the likes of Cisco Systems and Amazon.com Inc., companies with relatively few brick-and-mortar assets such as factories, machines and real estate. 

Interest really took off after the tech bust and accounting scandals of 2001, which made investors more aware of risks if a company’s reputation is trashed by governance and leadership lapses.  Companies also realized their shares were increasingly vulnerable to negative publicity over employee and social practices.

Reputation is a big reason Johnson & Johnson trades at a much higher price-earnings ratio than Pfizer, Procter & Gamble than Unilever and Exxon Mobil than Royal Dutch Shell.  And while the value of a reputation is vastly less tangible than property, revenue or cash, more experts are arguing it is possible not only to quantify it but even to predict how image changes in specific areas will harm or hurt the share price.

Source: BusinessWeek, July 9, 2007

http://www.businessweek.com/magazine/content/07_28/b4042050.htm?campaign_id=rss_magzn

Online Extra: Slide Show: Reputation Role ReversalGraphic: The Value Of Perception

http://coachingtip.blogs.com/coaching_tip/2007/06/the-power-of-pe.html

By Greg Walters

June 29 (Bloomberg) — OAO Gazprom, Russia’s natural-gas export monopoly, may form a joint venture with the oil company OAO Rosneft to develop the Sakhalin-3 offshore oil and gas project, Gazprom Chairman Dmitry Medvedev said.

Gazprom and state-controlled Rosneft agreed in late 2005 to bid jointly for oil and gas fields at home and abroad. Both companies are already active in hydrocarbon projects off Russia’s Sakhalin Island, north of Japan.

“Everything is going forward,” Medvedev said on the sidelines of Gazprom’s shareholders’ meeting today in Moscow, where the company is based. “There will be joint ventures. We’re thinking about Sakhalin-3 and other projects, including offshore projects.”

Gazprom won’t buy a stake in the Sakhalin-1 oil and gas project, the company’s Deputy Chief Executive Officer Alexander Medvedev said at the meeting. Rosneft owns a 20 percent stake in Sakhalin-1, while Exxon Mobil Corp.’s Russian unit, Exxon Neftegas Ltd., owns 30 percent and operates the project.

Rosneft has already agreed to develop Sakhalin-3′s Veninsky block with China Petrochemical & Chemical Corp, or Sinopec. The companies agreed in March that Rosneft would take 74.9 percent of the so-called Venin Holding Ltd. venture, which will hold the license to develop the block.

The Sakhalin-3 project includes four separate licensing blocks, according to Russian news agency Interfax.

To contact the reporter on this story: Greg Walters in Moscow gwalters1@bloomberg.net ;
Last Updated: June 29, 2007 13:12 EDT

By Chika Amanze-Nwachuku, 06.30.2007

Malabu Oil and Gas, a company owned by former Minister of Petroleum Resources, Chief Dan Etete yesterday disclosed that it had filed a preliminary objection to a suit brought by Royal Dutch Shell against the Oil Prospecting Licence (OPL245) re-allocated to it by the Federal Government. It said it would resist moves by Shell to “continue to act as clog in its (Malabu) efforts to develop and realise the full potential of the oil block.’’

Shell had gone before an Abuja Federal High Court  to challenge the decision of the Federal Government to re-allocate the oil block to Malabu.

Addressing newsmen in Lagos, Mr. Rasky Gbenigie, Company Secretary/Legal Adviser to Malabu insisted that the oil block licence, which was obtained in 1998, but was revoked in 2001, was restored to his company following an out-of court settlement after a protracted legal battle between Malabu and government.

He argued that Shell could not have been a party to the settlement agreement because the issue of ownership was the bone of contention between Malabu and the Federal Government, adding that it was in pursuance of the terms and conditions of the grant of the OPL 245 to Malabu that it (Malabu) sought the technical partnership of Shell to which the indigenous company also farmed out 40 per cent participating interest to Shell as its technical partner.

He argued that there was no basis for Malabu to invite Shell to be a party to the settlement agreement, when it terminated the partnership agreement, which it entered into with Malabu.

The counsel stated that the suit filed by Shell was intended to preserve its (Shell) rights as a contractor under the Production Sharing Contract (PSC) between it and the Nigerian National Petroleum Corporation (NNPC), insisting that Shell was merely a contractor to NNPC.

Continuing, he said, the PSC between Shell and NNPC anticipated the resolution of the dispute and consequently was predicated upon an escrow agreement executed between NNPC, Shell and federal government which made provisions for the return/refund of the sum of $209 million paid as signature bonus by Shell in the event that the litigation between Malabu and Government is resolved in favour of the later (Malabu).

“Therefore, Shell at all material times anticipated the resolution of the dispute between the Federal Government and Malabu Oil and Gas and every document they executed particularly the PSC was made subject to that resolution. Whether Shell can in the face of this undisputed fact contest the settlement agreement is left to be seen.”

http://www.thisdayonline.com/nview.php?id=82307&printer_friendly=1

By Joe Carroll and Greg Walters

June 29 (Bloomberg) — OAO Gazprom, the Russian energy company that seized control of $8.5 billion in projects from Royal Dutch Shell Plc and BP Plc, doesn’t expect to buy a stake in Exxon Mobil Corp.’s Sakhalin-1 oil and gas development.

Deputy Chief Executive Officer Alexander Medvedev told shareholders at a meeting in Moscow that plans for Gazprom to buy the natural gas output of the project won’t entail taking an ownership stake in the $17 billion venture. Gazprom said on June 26 that it wants to buy all the gas produced at the offshore Sakhalin-1 project to uphold the Moscow-based company’s monopoly on Russian gas exports.

Gazprom’s decision to leave Sakhalin-1 alone may have improved its chances of convincing Exxon to abandon plans to export the gas to China, said Fadel Gheit, senior vice president of oil and gas research at Oppenheimer & Co.

“This is their way of showing Exxon that there’s an easy way to do this and there is a hard way to do it,” said Gheit, who has a “buy” rating on the shares and personally owns the stock. “These are brutal chess players. They don’t push you; they make you jump.”

Jeanne Miller, an Exxon Mobil spokeswoman in Houston, said talks with Gazprom over Sakhalin-1 gas sales are continuing. She declined to comment on Medvedev’s statement.

Exxon, which pumps more crude oil than every member of OPEC except Saudi Arabia and Iran, is the lone international oil company to escape seizure of assets as President Vladimir Putin tightens his grip on Russia’s petroleum and mineral resources.

`Crosshairs’

Shell, the world’s second-biggest oil company behind Exxon, ceded a majority stake in its Sakhalin-2 project to Gazprom in December for $7.45 billion.

BP’s TNK-BP subsidiary last week agreed to surrender a controlling stake in the Kovykta gas field in Siberia and half of a pipeline unit to Gazprom. The price will range from $700 million to $900 million when finalized, the companies said in a June 22 announcement.

Exxon appeared to be next in line for an asset seizure after environmental regulators and local government officials began issuing citations and fines to Sakhalin-1 managers for overflowing trash bins, peeling paint and failing to spread enough sand across icy parking lots, Gheit said.

“It was the same pattern where they just want to harass them to tell them you’re in our crosshairs,” Gheit said. “They did the same things to Shell and BP and eventually they wilted them completely down and beat them into submission.”

Russia, Venezuela

Record energy prices have emboldened leaders in countries that are rich in oil and gas, such as Russia and Venezuela.

Exxon Mobil and ConocoPhillips have failed to come to terms with the state oil company in Venezuela, where the government of Hugo Chavez has taken control of oil joint ventures in the Faja region. The companies will leave Venezuela, the government said this week. Talks continue over the amount of compensation they will get for their assets.

Russia has 79.5 billion barrels of untapped oil, the sixth- largest reserves in the world, behind Saudi Arabia, Iran, Iraq, Kuwait and Venezuela, according to 2006 figures published by London-based BP.

Russia pumped 9.77 million barrels of oil a day last year, enough to supply 64 percent of U.S. demand. Only Saudi Arabia had higher output with 10.9 million barrels a day, according to BP.

Exxon’s Sakhalin-1 project began pumping oil in October 2005, reaching 250,000 barrels a day in February. The Irving, Texas, company operates and owns a 30 percent stake in the project under a 1996 production-sharing agreement with the Russian government.

7-Mile Wells

Exxon built the world’s most powerful drilling rig to bore wells from the island’s shore to reach oil reservoirs buried under the sea floor more than seven miles away. The three fields hold an estimated 2.3 billion barrels of oil and 17.1 trillion cubic feet of gas.

The other partners in Sakhalin-1 are a Japanese group known as SODECO that owns 30 percent; India’s Oil and Natural Gas Corp., with 20 percent; and OAO Rosneft, Russia’s state-run oil company, with 20 percent.

The first oil discovery at what is now Sakhalin-1 in the Russian Far East was in 1977. The development is comprised of the Chayvo, Odoptu and Arkutun Dagi fields, which lie under seas that are choked with ice for half the year.

To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net ; Greg Walters in Moscow gwalters1@bloomberg.net
Last Updated: June 29, 2007 17:54 EDT

Saturday, June 30, 2007
 
Shell Canada will proceed with an environmental assessment of its proposed new refinery near Sarnia, Environment Minister Laurel Broten has announced.

The Minister has approved the company’s terms of reference, which is a work plan for an environmental assessment. It outlines the steps and studies Shell will undertake to identify environmental and cumulative effects and describes the methods that will be used for assessing the effects.

“The terms of reference is just the first step in the environmental assessment process, which Shell has volunteered to undertake,” Broten said. “An EA will inform us if the refinery can be designed and constructed in a manner that respects the environment.”

Components of the proposed project are expected to include new pipeline infrastructure, a co-generation electricity unit, a dock on the St. Clair River, storage of crude oil and highway/railway improvements. Shell’s studies will include modeling of groundwater conditions, aquatic and terrestrial environments, air quality and noise.

Shell’s proposal will also be subject to the federal EA process, which will be coordinated with Ontario’s process, as well as other federal and provincial environmental laws including the Environmental Protection Act and Ontario Water Resources Act.

Shell undertook extensive consultation during the preparation of the terms of reference and is committed to continuing to seek the community’s and First Nations’ input into the environmental assessment.

Visit www.ene.gov.on.ca

http://hazmatmag.com/issues/ISArticle.asp?id=70853&issue=06302007

(The following is a reformatted version of a press release issued by the New Jersey Department of Environmental Protection and received via electronic mail. The release was confirmed by the sender.)

June 29, 2007

STATE FILES LAWSUITS SEEKING COMPENSATION FOR DAMAGES POLLUTERS CAUSED TO NATURAL RESOURCES

TRENTON – The state has filed approximately 120 lawsuits that could result in hundreds of millions of dollars in compensation from polluters who have harmed New Jersey’s natural resources, including numerous manufacturers and marketers of the gasoline additive MTBE, Department of Environmental Protection Commissioner Lisa P. Jackson announced today.

“We are committed to holding accountable those polluters whose actions have sullied our rivers, land and ground water, diminishing public enjoyment of these natural resources,” Commissioner Jackson said. “Working closely with the Attorney General’s office, we will aggressively pursue these claims through the court system until the public has been justly compensated for its losses.”

Attorney General Anne Milgram added: “We are working with DEP to ensure that contaminated properties are cleaned up and restored, and that, where appropriate, polluters compensate the residents of New Jersey for the loss of precious natural resources.”

The lawsuits, known as natural resource damage claims, seek compensation above and beyond cleanup costs and fines that DEP levies against polluters. DEP uses money from natural resource damage settlements toward ecological restoration projects, typically in the same watershed or general area where resource damages occur.

One of the lawsuits specifically targets scores of designers and manufacturers of the gasoline additive methyl tertiary butyl ether as well as major-brand refiners and marketers of gasoline that used MTBE, including Amerada Hess, Atlantic Richfield Co., BP America, Chevron, ExxonMobil, Getty, Shell, Texaco and Valero Energy.

With this particular lawsuit, New Jersey becomes the third state to file complaints seeking natural resource damages for the recovery of all past and future costs to investigate, remediate and restore natural resources damaged by the discharge of MTBE.

Among other companies facing natural resource damage lawsuits are Ciba Geigy Specialty Chemicals in Dover, Ocean County; the Bayway refinery in Linden, Union County; Gloucester City Titanium in Gloucester City, Camden County; Landfill & Development Co. in Lumberton, Mount Holly and Eastampton, Burlington County; as well as Dow/Union Carbide in Middlesex Borough and Piscataway Township, Middlesex County.

The state’s lawsuits take a special focus on polluters that have damaged river resources. Lawsuits have been filed against ISP Environmental Services and G-I Holdings Inc., located in Linden along Piles Creek near the Arthur Kill; Mallinckrodt Baker, along the Delaware River in Phillipsburg, Warren County; Genstar Gypsum, located along the Delaware River in Camden, Camden County; and Rhone Poulenc along the Raritan River in Middlesex Borough.

“These companies have left a legacy of pollutants in sediments ranging from PCBs and pesticides to volatile chemicals and hydrocarbons,” Commissioner Jackson said. “Clean rivers are vital to a vibrant economy and a healthy environment.”

Since its inception in 1994, DEP’s Natural Resource Damage program has recovered more than $51 million and preserved approximately 6,000 acres of open space as wildlife habitat and ground water recharge areas as compensation for pollution resulting from 1,500 contaminated sites and oil spills.

Under DEP’s technical rules, all parties responsible for polluting a site must conduct a thorough analysis to determine the nature and extent of pollution. Once this remedial investigation is completed, DEP has 5 ½ years to file a lawsuit to recover damages to natural resources if the responsible party does not restore the injured resource before then.

The Legislature recognized that remedial investigations were completed at some sites many years ago without the filing of natural resource damage lawsuits.

Consequently, the Legislature provided a mechanism that required filing of lawsuits within 5 ½ years of Jan. 1, 2002. The lawsuits include sites evaluated by DEP and the Attorney General’s office as being affected by this deadline, which expires Saturday.
DEP and the Attorney General’s office continue to file new natural resource damage claims as remedial investigations are competed.

For a listing and electronic versions of individual lawsuits, go to:

http://www.nj.gov/oag/newsreleases07/NRD-lawsuits-07/ .
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Contact: Elaine Makatura (609) 292-2994
Lawrence Hajna (609) 984-1795
(sgp)NY
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Last Updated: June 29, 2007 16:08 EDT

June 29, 2007 04:10 PM
 
Recently the National Geographic magazine published a feature piece on the Niger Delta “Curse of the Black Gold: Hope and Betrayal in the Niger Delta“. For those familiar with the issues of the Niger Delta there was really nothing that has not been reported by human rights environmental activists and Human Rights Watch over the past 15 years. What is new and cause for concern is the article “Nigeria and the United States: Convergent Interests” published by the Center for International Policy. A few months back I was contacted via my blog by a US contractor called Carol Chapital asking if I was willing to assist on a project in Nigeria. 

We are preparing a study which is required to be reviewed by subject matter experts. Your name was provided as an expert. If your name is inappropriate with the academic subject experts, I apologize for the inconvenience.

It was all a bit “cloak and dagger” as they wanted my mailing address which I wasn’t prepared to provide without knowing who they were and what the whole thing was about. Finally because I was intrigued and wanted to know more the conversation followed through to the point when I received a proposal by the actual contractors “Delex Systems Inc“. It took a 5 minute scan of their website to figure out that they were an American military and intelligence outfit undertaking contracts for the US government – check out the “leadership” – all ex US military of some sort. 

This is the letter I received.

Dear Ms Ekine
Delex Systems Inc is writing a cultural study of behalf of the US Marine Corp on ethnic groups in the Niger Delta region of Nigeria. Part of our task is that we have our studies reviewed by recognized experts. Your work on ethnic groups in the Niger Delta [Research on women and state/multinational violence in the Niger Delta]is high regarded in the academic world [unknown to me but quite flattering] and we were interested in soliciting a bid from you for an academic review. The cultural study is on the Ijo [Ijaw]

The letter goes on to state number of pages and hours anticipated and asks me for an hourly rate to cover about 40 hours. Needless to say I sent a one line response that I was not interested in the work. I have been told that the US military are already operating in the Niger Delta on an advisory capacity but I haven’t actually got any proof so if anyone has please let me know. The reason I am drawing attention to this at this point in time is because this contract appears to tie in with the piece published by the Center for International Policy.

In order to manage this policy, the U.S. Department of Defense just announced the establishment of an African military command—AFRICOM—to spearhead an “oil and terrorism” policy, which will oversee the deployment of U.S. forces in the area and supervise distribution of money, materiel and military training to regional militaries and proxies. Pentagon analysts and generals claim that vast “uncontrolled spaces” in Saharan and Sahelian Africa, which are said to include large portions of northern Nigeria, are rife with terrorists seeking to damage the United States, even though the evidence for such claims is woefully thin. Nevertheless, a $500 million “Trans-Sahara Counter Terrorism Initiative” (TSCTI), which will tie African militaries to American policies, is in the works. Given the internal security problems often found in resource rich countries, it is much more likely that the newly-acquired skills and equipment will be directed against domestic opponents than global terrorists. 

The contradictions of this policy are evident in Nigeria, which currently provides 10-12 percent of U.S. oil imports and serves as the cornerstone of the strategy even as it demonstrates its deeply-flawed reasoning. Since the end of 2005, the on- and offshore oilfields of the Niger Delta––the major source of the country’s oil and gas––have essentially become ungovernable as a site of on-going and violent contestation between local ethnic groups, oil corporations and the Nigerian government. This violence results in repeated reductions and shutdowns of oil, sometimes exceeding 500,000 barrels per day. Moreover, reports the World Bank, some 80 percent of Nigeria’s oil monies flow to one percent of the population, while 75 percent of the country’s people live on roughly one dollar per day. In other words, the United States is relying on increased oil production from the African Oil Triangle to reduce its dependence on Middle East petroleum, but could replace one set of insecurities with another.

Clearly the Nigerian Government is planning on working with the US military in the Niger Delta – whether this will continue in a low profile advisory capacity or escalate into something more is not clear. But the US Marines / US Government are not going to carry out their own research into the region unless they are going to use the information to pursue a specific set of agendas presumably with the knowledge of the present Nigerian regime. Back in 2003, The Heritage Foundation published a piece calling for the US to “consider expanding its U.S. Central Command (CENTCOM) to include Africa ” 

With its vast natural and mineral resources, Africa remains strategically important to the West, as it has been for hundreds of years, and its geostrategic significance is likely to rise in the 21st century. According to the National Intelligence Council (NIC), the United States is likely to draw 25 percent of its oil from West Africa by 2015, surpassing the volume imported from the Persian Gulf.1 (Sub-Saharan Africa currently provides the U.S. with 16 percent of its oil needs.)

In addition, Africa has the world’s fastest rate of population growth. The continent’s population has doubled since 1970 to nearly 900 million and is expected to rise to 1.2 billion by 2020.2 This will be greater than the populations of North America and Europe combined.

The US government obviously took note as AFRICOM – US military command in Africa is set to be launched although initially it will be based in Germany for some reason. US forces are already based in Djibouti and more recently Command Ethiopia. The cover for creating AFRICOM, which includes Nigeria, is hardly new – risk from al Qaeda linked terrorists on the continent but the truth goes way beyond al Qaeda to protection of US commercial and military interests on the continent. Another interesting dynamic is China and it’s commercial interests in Africa. This begs the question of how the two forces – US military interests and Chinese commercial interests will operate side by side. For example in Nigeria, China has just signed a $billion oil deal while the US is involved on some level militarily and both countries are operating or will be operating in the Niger Delta. One school of thought is that the military presence in Africa is more likely to be a “countervailing civilian presence” whose aim is to “to lie low and work through African institutions to train troops and strengthen security,” than actual armed personnel. They would continue to be based in the Horn of Africa and Egypt for easy deployment if and when necessary. However the Convergent Interests piece (see link below) commenting on Nigeria states

Nigeria, currently providing 10-12 percent of U.S. imports, serves as the cornerstone of this Gulf of Guinea strategy. But since the end of 2005, the on- and off-shore oilfields of the Niger Delta––the major source of Nigerian oil and gas––have essentially become ungovernable. Political instability and violent conflict have deepened to the point that some of the oil and oil-service companies working there, including Chevron, Royal Dutch Shell, Exxon-Mobil, and Julius Berger, feel that their “social license to operate” is rapidly eroding. In 2003 and 2004, armed insurgencies and attacks on oil installations cut national oil output by forty percent. More recently, the emergence of a shadowy group of insurgents in the western Delta in late 2005—the Movement for the Emancipation of the Niger Delta (MEND)— marked a major escalation of insurgent activity. In the first three months of 2006, $1 billion in oil revenues were lost and national output was cut by one third. The escalating political crisis in the Delta threatens American energy security, the security of Nigeria’s fledgling democracy and, indeed, the entire West African region as a source of reliable energy. 

Approaching 140 million citizens, Nigeria is not only the most populous country in Africa, it is also a major supplier of petroleum to American and European markets. During the next two decades, it is expected to become even more critical, along with other oil-producing countries in the West African “Oil Triangle.”

To put the scale of wealth into perspective and to emphasise the stakes for Nigeria, the US and more recently China, the World Bank reported that 80% of oil wealth is owned by 1% of the population; 70% of private wealth is abroad whilst 3/4 of the country live on about $1 a day – at least 15 million of those live in the Niger Delta (there are estimated 12 million Ijaws – an ethnic group that covers a very broad range of languages and city states)- though as the latest census did not include ethnic origin that number is somewhat arbitrary in 2007). President Obasanjo has made it clear that his policy towards the Niger Delta is to eliminate the militants and subjugate the non-violent movement for self-determination and resource control that started with the late Ken Saro Wiwa. It is therefore not surprising that the US has become directly involved with this Nigeria as part of their overall AFRICOM policy and in Nigeria’s case to protect their petroleum interests. Obasanjo will soon leave but the PDP will no doubt win the elections and realistically the same group of elite forces will continue to run the country so it is highly unlikely that there will be any changes in Nigeria’s relationship with the US.

Links

Curse of the Black Gold: Hope and Betrayal in the Niger Delta

http://www7.nationalgeographic.com/ngm/0702/feature3/index.html

Nigeria and the United States: Convergent Interests

http://www.ciponline.org/nigeria_summary.html

For the article with all working links go to…

http://www.africanpath.com/p_blogEntry.cfm?blogEntryID=1239